Betfair has parted company with the chief executive of LMAX – just three months after the online trading platform launched for retail investors.
The departure of Robin Osmond, a former head of global investment banking at Morgan Stanley, is likely to raise City fears about the roll out of the LMAX platform.
Betfair owns a majority 75pc stake having invested more than £25m in the start-up business.
When it floated late last year Betfair highlighted its growth prospects. “We hope LMAX can be as disruptive as Betfair,” David Yu, chief executive of Betfair told The Sunday Telegraph ahead of last year’s float.
“We’re creating a marketplace where retail customers can come together and trade into the exchange directly without having to go through a market maker. It’s taking out one link in the chain. We brought a fundamentally different way of allowing people to bet that was more efficient and we’re trying to do the same in financial trading.”
Goldman Sachs and Morgan Stanley, which brought Betfair to the market, also made much of LMAX’s prospects, given it was built on Betfair’s original technology which matched peoples’ bets..
But in recent months analysts have questioned how successful the roll-out has been.
LMAX aims eventually to match retail investors who want to trade contract for differences in market indices, fixed income products, commodities and foreign exchange products. But according to rivals, LMAX is still offering the opportunity to bet on a limited number of products and market makers are still thought to be providing much of the liquidity.
Questioned by analysts on LMAX’s performance last month at the company’s third quarter trading update, Mr Yu promised to update shareholders and analysts on progress when the group announces its full year results in June.
A spokesman for Betfair said: “As a shareholder, we remain fully committed to LMAX. It is an exciting start-up business in its early stages of development that we believe, through its unique platform, offers retail traders a completely different experience to any other retail financial trading outlets.”
Shares in Betfair have fallen sharply since the company was floated by Goldman Sachs and Morgan Stanley in October 2010 at £13 a share. On Friday they closed at 985p, down almost 25pc in less than six months.
A disappointing maiden trading update in December, which saw the group report growth of just 1.6pc, has hit City confidence in the company.
But it is not just investors who have had cause for concern. Last month, Betfair’s decision to move offshore - operating under a licence from Gibraltar - worried the racing industry, amid fears of its commitment to UK horseracing. The fears emerged in spite of Betfair’s promise to maintain its £7m a year contribution to the Horserace Levy.
Mr Osmond had resigned “to pursue other opportunities in the City”, according to a spokesman for LMAX.
David Mercer will take on the role of interim chief executive at LMAX. “Robin [Osmond] will remain with the company for a period of time to ensure an orderly and effective transition,” the spokesman continued.
In a statement Edmond Warner, chairman of LMAX, said: “Robin [Osmond] has made a significant contribution to LMAX, both during its creation and since its subsequent launch in October last year. He leaves the company well-placed to deliver a product which is truly differentiated from the existing market participants.”
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Back (Bet for) Your Odds Your Stake Your Profit Cabbyl Doo 90 £600.00 £53,400.00 You are betting FOR Cabbyl Doo to win. You are betting FOR Cabbyl Doo to win. If you win, 'Your Stake' of £600.00 is returned to you together with a profit of £53,400.00. If you lose you lose 'Your Stake'.
Lay (Bet against) Backer's Odds Backer's Stake Payout Liability Your Liability Your Payout Cabbyl Doo 1.35 £600.00 £810.00 £210.00 You are betting AGAINST Cabbyl Doo to win. You are betting AGAINST Cabbyl Doo to win. If you win, your profit is the 'Backer's Stake' of £600.00. The amount you stand to lose is the 'Total Liability' of £210.00. Be aware that "live" TV broadcasts may be delayed.
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Hex 5th May - 19:10 2m Nov Hrd Matched: GBP 535,617 In-play Going in-play Live Video Radio Tote Race Card Back & Lay Market Depth Betfair Starting Price (SP) More options Selections: (9) 102.4% Back SP Lay 99% 2 Cabbyl Doo Brian Ha